Intermodal Network Update for Friday, February 2, 2018

Feb 2, 2018

Operational Performance
The operation is delivering solid overall performance while handling robust freight volume. We are experiencing good fluidity across the network with reduced terminal dwell and total trains held this week. Average velocity for both cars and trains remains strong and significantly higher than levels from the previous January. With increased market demand, particularly in our intermodal business, BNSF set an all-time January record for volume in a single week, with nearly 210,000 units moved during the Week 4 reporting period, January 21-27.

2018 BNSF Capital Plan
BNSF announced our 2018 capital investment plan earlier this week. The approximately $3.3 billion plan will ensure that we continue to operate a safe and reliable rail network while meeting freight shipment demands. Like last year, the largest component of the plan will be to replace and maintain BNSF's core network and related assets. This year's maintenance program will include approximately 13,000 miles of track surfacing and/or undercutting work and the replacement of more than 500 miles of rail and nearly three million rail ties.

The plan includes $500 million for expansion and efficiency projects. The majority of those projects are focused on key growth areas along our Southern and Northern Transcon routes, connecting Southern California with Chicago and the Pacific Northwest to Upper Midwest respectively. We will provide further details on many of the line capacity projects in subsequent updates throughout the year.

We also allocate $300 million for freight cars and other equipment acquisitions as well as $100 million for continued implementation of Positive Train Control (PTC). BNSF is the only Class I freight railroad to have completed the installation of PTC on all its federally mandated subdivisions. We are currently running hundreds of trains daily with PTC as we continue to test and refine this highly complex system.

2018 Intermodal Capital Projects - Southern Transcon Line Expansion
There are major capital expansion projects planned this year at key locations on the Southern Transcon from the desert Southwest to the Texas Panhandle. One of the most impactful projects will involve adding a fourth main track to nearly four miles of our Hereford Subdivision in Amarillo. The project, which is scheduled to begin on February 27, will be completed in several phases to minimize the impact to train flows through the area.

With additional main track in these locations, BNSF will be able to offer a pass-through option for trains traveling at higher rates of speed, akin to an HOV express lane on the highway, that will eliminate traditional bottlenecks and help keep crucial sections of our Southern Transcon route fluid. We will continue to update customers with more details throughout the year.

2018 Intermodal Facility Expansion
The 2018 capital plan also includes $91 million for intermodal facility expansion. We have a multi-year capacity expansion program underway at our intermodal facilities in Southern California to handle growing volumes from customers shipping to and from the region.

In 2017, BNSF completed expansion projects at our Los Angeles and San Bernardino Intermodal Facilities, which helped us expand our capabilities and provide additional capacity. This year, we will construct a full production track, which is used to load and unload trains, at our Los Angeles - Hobart Intermodal Facility and acquire associated lift equipment.

We also anticipate the completion of expansion projects started in 2016 at our Alliance Intermodal Facility in Fort Worth. Those projects include adding parking capacity as well as acquiring associated expansion lift equipment.

Service Expectations for the Week Ahead
Extremely cold temperatures have returned across much of the Northern Corridor and will remain in place during the next several days. Some traffic may experience delays due to train length restrictions as well as distributed power for trains that may be needed. No major winter storms are expected at this time, and much of the network will experience favorable operating conditions as we move into February.

Some trains may experience delays due to ongoing maintenance activity, as shown on this map, along our Ft. Worth, Panhandle and Slaton Subdivisions in north Texas next week. Rail replacement work will also continue on our Birmingham Subdivision in Mississippi and Alabama, which may also cause some delays during scheduled work windows.

Below is a look at the key operational performance categories for the week ending February 1:

Total trains held for the week decreased by more than 21 percent with an average of 61.4 trains held versus 77.9 trains held during the prior week.

    Versus the January 2017 average: down by 32.6%

Total trains on the system was up by nearly three percent versus the prior week with an average of 1,515 trains on the system.
    Versus the January 2017 average: up by 10.8%

Car velocity was up by more than one percent at 232.7 MPD versus 229.9 MPD recorded the prior week.
    Versus the January 2017 average: up by 11.1%

Train velocity, measured in miles per hour (MPH), was essentially unchanged versus the prior week at 19.7 MPH.
    Versus the January 2017 average: up by 6.9%

Total volume was up by nearly four percent from the prior week with 209,567 units moved in Week 4 (ending January 27) versus 201,533 units in Week 3 (ending January 20).

Terminal dwell decreased by nearly one percent versus the prior week at 24.1 hours.
    Versus the January 2017 average: down by 16.1%

As always, we thank you for your business and appreciate the opportunity to serve as your transportation service provider. We welcome your feedback and questions.